Consultant Role Becomes Clearer
Recent data helps confirm how much consultants specify in the AV marketplace. The impact is clear, but the details are still a bit fuzzy.
CONSULTANTS HAVE always had to find ways to be recognized, respected, and listened to. We haven't always been successful for a number of reasons. Sometimes our work wasn't good enough, our clients didn't understand what our role truly was, or there wasn't enough data to confirm our place in the industry.
In 2001, InfoComm's Independent Consultants in Audiovisual Technologies (ICAT) council conducted its first bid survey to find out how much work independent consultants were really responsible for. It received a fairly good response, and made it possible — through a few assumptions —to estimate how much work consultants specified each year.
The best estimates for the total size of the pro AV integration market at the time — using what we called “fuzzy math” because of the required assumptions — was about $4 billion. It was estimated that consultants were responsible for 25 to 35 percent of that figure, or a little more than $1 billion.
There have been subsequent ICAT surveys that weren't as useful because of a relatively low response, but this year's survey received a record response from 30 firms. This represents about a third of the independent consulting firms represented in ICAT, and probably around 10 percent of the estimated 300 pro AV-focused consulting firms in the United States and Canada, based on a few manufacturer's lists of independent consultants. It's still a bit low, but this creates a better basis than we've ever had for estimating consultants' impact on the market.The big study
This time we also had the benefit of the most comprehensive AV market definition study available, which InfoComm commissioned in 2004. This study put the overall AV marketplace for the U.S. and Canada at a grand total of $18.9 billion, including both integrated systems (equipment and services) and pure box sales. This number was initially met with skepticism by most consultants who weren't familiar with the detail behind it. But now that the study is freely available to InfoComm members for analysis, we're finding that the breakdown behind this number looks more like what we expected.
The study found that 18 percent of the $18.9 billion came from direct sales to end-users, while 82 percent ($15.5 billion) came from indirect sales. A little less than half of the $15.5 billion was distributed via retailers, online resellers, and other distribution channels.
However, 29 percent ($4.5 billion) was delivered through self-identified systems integrators, plus another 26 percent ($4 billion) via self-identified pro AV dealers. Given that system integrators will generally have some box sales, and pro AV dealers are usually a bit heavier on box sales, the total integration market (excluding box sales) probably lies somewhere between $5 billion and $7 billion.
The 2004 market study also found that 14 percent of the combined integration and pro AV dealer market was designed and specified by consultants, based on the total including box sales. Therefore, of the entire $8.5 billion channel, $1.2 billion was specified by consultants.
So far, so good, but we can extrapolate from other data in the report as well. The market study also reported the amount of pure services provided in the market, including a breakout of independent consultants' services, which totaled $250 million. Although consultant's fees can fall within a broad range (say, 8 to 20 percent of the integrated system cost), depending on project size, project complexity, and services rendered, 10 percent is often used as an aggregate average. These numbers bring us to a figure of $2.5 billion of specified systems — significantly more than the figure from the method above. This discrepancy can likely be explained by the diversity of services consultants offer because the ICAT surveys showed that about 40 percent of their services are data telecom or other consulting services that don't produce AV systems. Using that number, we get about $1.5 billion in specified AV systems.
The result? Consultants specify between 17 and 30 percent of the integration market, which is consistent with the percentage range we came up with in 2001 using fuzzier numbers.